UK Capped Rate Mortgage

A capped rate mortgage can be of advantage to borrowers as they offer protection against repayments going over a certain level. You agree to have a limit - a cap - on the maximum amount of interest you will pay over a particular period of time while allowing it to fall if the variable rate drops, this means that if the interest rate is set to go up, over and above the predetermined cap rate, then the borrower will still only pay the predetermined rate.

A capped rate mortgage puts a maximum limit on the payable rate you have to pay, wheras if it falls below the borrowers standard variable rate cap then they would get to pay that lower amount. This is a product that puts together one of the most attractive aspects of a fixed rate mortgage, that you know what limit your mortgage is going to rise to at worst and iIt mixes with a variable rate mortgage, where if base rates go down, your mortgage pay rate will follow it down.

The capped rate usually lasts for a few years, averaging around five years. If you shop around you could find Capped Rate Mortgages that run for the entire length of the loan, some can be found with introductory discount periods. Capping the interest on your mortgage can help you to budget more effectively each month, as you will always know what the most amount of money is that you will have to pay.

There are also Mortgages that have a Cap and Collar. 'Cap' being the limit on the maximum interest rate, the 'Collar' being a limit placed on the minimum rate. The cap is set lower than with a normal capped mortgage, as an incentive for you to accept the collar. With the Cap and Collar your mortgage rate will remain within the two.

Full range of UK Mortgages:

100% | Buy to Let | Capped Rate | Discounted Rate | Endowment | First Time Buyer | Fixed Rate | Flexible | Interest Only | ISA | Non Status | Self Build | Self Certification | Self Employed | Tracker | Variable Rate